State fines Hilcorp $20K, cites pattern of violations

In the half decade since it started operations in Alaska, Hilcorp has become a significant oil producer and the largest natural gas producer in Cook Inlet. Website screenshot May 6, 2016
In the half decade since it started operations in Alaska, Hilcorp has become a significant oil producer and the largest natural gas producer in Cook Inlet. Website screenshot May 6, 2016

Download Audio

Hilcorp Alaska is facing a $20,000 penalty from the state for unsafe use of equipment on the North Slope.

It’s the latest in a string of violations for Hilcorp, which a state agency says has developed a pattern of regulatory noncompliance.

The penalty stems from a series of actions in April and May 2015, when Hilcorp was conducting repairs on a well at its Milne Point Unit on the North Slope. During the work, the company lost control of the well and had to use a blowout preventer to shut it in and stop the flow of fluids.

But that in and of itself wasn’t the problem.

“Having to use the blowout prevention equipment in and of itself isn’t a bad thing – that’s what it’s there for,” said Cathy Foerster, of the Alaska Oil and Gas Conservation Commission (AOGCC),  the state agency charged with ensuring the safety of all wells in Alaska. “It’s like, how many times are you glad you have your seatbelt on.”

The problem was what happened next. The AOGCC says the company failed to properly report the incident, calling Hilcorp’s communications “misleading and incomplete.” Then the company didn’t test the blowout preventer before continuing with its work.

This isn’t the first time Hilcorp has run into trouble. Commissioners attached a document listing some 25 violations since 2012. Altogether, the AOGCC has proposed over a million dollars in fines, though many of those penalties are still under adjudication.

In its decision, the commission called the Milne Point Unit incident “emblematic of ongoing compliance problems” at Hilcorp’s operations, saying the disregard for regulations “is endemic to Hilcorp’s approach” in Alaska.

But, Foerster said, the company has pledged to do better going forward.

“Recent conversations with my staff indicate that they’re seeing a cooperative effort to understand and comply with the regs,” she said.

Hilcorp can still appeal the penalty. The company didn’t reply to requests for an interview by deadline.

Based in Texas, Hilcorp is relatively new to Alaska, but over the last half-decade it has built operations both in Cook Inlet and on the North Slope, becoming a significant oil producer in the state, as well as the largest natural gas producer in the Inlet.